Ongoing pandemic forces early shopping, boosts mall traffic
As we head into another holiday season amid a pandemic, learn what consumers think about shopping, spending, and travel.
With the holidays fast approaching, it’s hard to believe that just last December we were reading about the first Americans to get the COVID-19 vaccine. A “return to normal” felt closer than ever but the Delta variant had other plans. And here we are facing another holiday season contemplating familiar and new pandemic-related issues, leaving brands and retailers struggling to know what to expect from consumers this holiday season.
Compared with the research we ran last year on consumer sentiment trends, I’m happy to report that consumers feel more optimistic this holiday season. Spoiler alert: in-store shopping, holiday travel, and bigger Gen Z holiday budgets will make a comeback. Still, between the global supply chain chaos, Delta variant, and a desire for normalcy, brands and retailers will be navigating another unique season with distinct challenges and opportunities.
“Spoiler alert: in-store shopping, holiday travel, and bigger Gen Z holiday budgets will make a comeback.”
We recently conducted a study1 of 2,738 adults to find out what this year’s seasonal consumer looks like. Here are the consumer trends that B2C brands should watch this holiday season.
Consumers are feeling 'more merry' about holiday travel
Last year, our research revealed that most Americans were fearful of holiday travel, but this year families and friends are eager to reunite. In fact, nearly half of all U.S. adults plan to travel during the upcoming holiday season, with one-in-three expecting to fly. This trend is more pronounced with younger generations who appear to be less risk-averse.
Gen Z is especially keen on traveling, with 59% indicating they are very likely to travel for the holidays, compared with 48% of Millennials, 45% of Gen Xers, and 41% of Boomers. And where are they headed? Our research revealed that 56% of travelers said they would be traveling within the same state, 42% indicated they would be heading out-of-state, and 7% shared they would be traveling internationally.
59% of Gen Z plan to travel during the holiday season.
In more positive news for the travel industry, only 22% of travelers are expected to cancel compared to 50% last year. Highlighting a growing tolerance for pandemic-related risk, 30% of travelers who canceled their plans last year say they would have made a different choice.
Holiday strategy tip: While a winter surge could shift sentiment, the airline and travel industry should capitalize on the opportunity to optimize campaigns and tailor promotions to multigenerational audiences.
Holiday shopping in October? Consumers say 'Yes'
Over the past few months, the aerial shots showing the parking lots of cargo ships across the major U.S. ports have captured the nation’s attention and prompted a big shift in holiday shopping behavior. Primed to be the holiday grinch, the global supply chain issues have consumers nervous about product shortages and shipping delays—45% of American consumers say they are apprehensive about supply chain issues affecting their purchases.
In response, 38% of Americans plan on starting their holiday shopping this year in October, including 22% who have already begun, and 16% who plan to do so later this month. Only 14% plan on starting in December.
22% of Americans have already started their holiday shopping.
Does this mean Black Friday and Cyber Monday are obsolete this year? Not so fast. According to our report, 28% of Gen Z consumers are relying on these more traditional holiday events to begin their shopping.
Holiday strategy tip: While the Biden administration just announced measures to ease the supply chain crisis and consumers plan to shop early, retailers and brands will need to figure out a game plan to mitigate unhappy consumers facing shipping delays and limited product availability.
Holiday budgets are expected to be smaller or remain the same
While recent reports indicate that American households are doing better financially than they were in 2019 and that the unemployment rate has fallen back below 5%, it seems most consumers won’t be overspending this year. Only one in 10 shoppers say they have a larger budget for their holiday shopping this season compared to last year, while 38% say they have a tighter budget, and 49% are planning on sticking to the same budget as last year. However, retailers should be aware that younger consumers, including 22% of Gen Z are allocating more money to their holiday budgets this year than in 2020.
22% of Gen Z are allocating more money to their holiday budgets compared to 2020.
So, what’s on everyone’s shopping list this season? Our research revealed the top five categories: clothing (55%), games/toys (41%), giftcards (33%), home goods (32%), and technology (32%).
Holiday strategy tip: There is a big opportunity for brands and retailers to engage younger consumers throughout the shopping season.
In-store shopping returns; online shopping and BNPL usage accelerates
Last year, the pandemic halted physical shopping for many, but this year tells a different story. Yes, online shopping will continue to accelerate, but in-person shopping will make a comeback, led by younger shoppers. While 44% of Americans plan to do more online shopping, 23% of Gen Zers and 20% of Millennials expect to shop more in-person this year, compared to last year.
23% of Gen Z and 20% of Millenials plan on more in-store shopping this year, compared to last year.
Since online shopping will remain dominant, luxury brands should note that wealthier consumers plan to do more online shopping this season than other consumer segments: 50% of those making $100,000 or more per year plan on shopping more online, compared with 46% of those making $50,000 to less than $100,000, and 40% of those making less than $50,000 annually.
Across the board, retailers will need to focus on providing flexible payment options. Credit, debit, and cash are the leading payment methods for holiday shopping, but “buy now, pay later” (BNPL) services are making an appearance. For this holiday season, 21% of Gen Zers plan on using a digital wallet, while BNPL services expect to see the highest usage among Millenials (14%). This trend is consistent with a study2 of 3,353 U.S. consumers we ran in August 2021, where Millenials and Gen Z were most likely to take advantage of BNPL services.
Holiday strategy tip: Overall, in a stark reversal from last year, brands and retailers will need to balance a flawless digital and in-store experience.
New holiday normal: 'Tis the season for agile insights
This year’s unique holiday season highlights how fast consumer behaviors are evolving and the pressing need for brands and retailers to embrace agility. Building the foundation to anticipate consumer needs, quickly respond to challenges, and capitalize on opportunities will be the key to winning this year’s holiday season, and beyond.
To stay ahead of the curve, many are turning to agile market research to tap into deeper insights about consumers and trends faster. You can read how these top brands embraced data and new technology to pivot quickly and thrive in the post-pandemic world of never-ending change.
Jon Cohen is chief research officer at Momentive.
1This Momentive study was conducted between Oct. 5-7, 2021 among a national sample of 2,738 adults. Data is weighted for age, race, sex, education, and geography using the Census Bureau’s American Community Survey to reflect the demographic composition of the U.S.
2This Momentive study was conducted between Aug. 18-20, 2021 among a national sample of 3,353 adults. Data is weighted for age, race, sex, education, and geography using the Census Bureau’s American Community Survey to reflect the demographic composition of the U.S.